Strategic-Economic Bloc

Strategic-Economic Bloc

Strategic-Economic Bloc


  • The US and other partner nations of the Indo-Pacific area jointly launched the Indo-Pacific Economic Framework (IPEF). The 14 IPEF partners account for 28% of worldwide commerce in products and services and 40% of the world’s GDP.
  • To improve resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness in the region, it aims to strengthen economic ties between member nations.

Indo-Pacific Economic Framework

  • President of the United States Joe Biden announced the Indo-Pacific Economic Framework for Prosperity (IPEF) on May 23, 2022.
  •  With an open invitation to other states, the framework was established with a total of fourteen founding member nations in the Indo-Pacific area.
  • The IPEF’s four foundational pillars were stated by the US: 
  1. Supply-chain resilience:

      • Focuses on enhancing the resilience of supply chains in the Indo-Pacific region.
      • Aims to strengthen critical infrastructure, logistics, and connectivity to ensure the uninterrupted flow of goods and services.
      • Addresses challenges such as disruptions caused by natural disasters, pandemics, or geopolitical tensions.
      • Promotes cooperation among member countries to diversify supply chains and reduce dependence on single sources.
  2. Clean energy, decarbonization, and infrastructure:

      • Aims to promote clean and sustainable energy solutions in the Indo-Pacific region.
      • Encourages the transition to a low-carbon economy to mitigate the impacts of climate change.
      • Supports the development of green infrastructure projects, such as renewable energy installations, energy-efficient transportation systems, and sustainable urban planning.
      • Fosters collaboration in research, innovation, and technology transfer in the clean energy sector.
  3. Taxation and anti-corruption:

      • Focuses on promoting fair and transparent taxation practices in the Indo-Pacific region.
      • Aims to combat corruption and illicit financial flows that undermine economic growth and development.
      • Encourages cooperation among member countries to share best practices in taxation, including measures to prevent tax evasion and money laundering.
      • Supports efforts to improve governance, strengthen institutions, and enhance transparency in public administration.
  4. Fair and resilient trade:

      • Aims to foster fair and resilient trade practices among IPEF members.
      • Promotes a rules-based international trading system that ensures a level playing field for all participants.
      • Emphasizes the importance of inclusive trade policies that benefit all segments of society, including small and medium-sized enterprises (SMEs) and marginalized groups.
      • Facilitates the removal of barriers to trade, including tariffs, non-tariff barriers, and discriminatory practices.
      • Encourages the negotiation of trade agreements and partnerships that promote economic integration and cooperation in the Indo-Pacific region.

Points to Ponder:

  •  India’s decision to leave the RCEP in 2019 and consider joining the IPEF in 2023 shows a change in the country’s foreign policy goals. While its relationship with China has gotten worse, India now places a high focus on forging a strategic alliance with the United States.
  • India’s departure from RCEP was motivated by worries about how a trade agreement with China would affect its industrial sector. There were worries that a rush of inexpensive Chinese goods might hurt indigenous industries by flooding the Indian market.
  • India confronts economic difficulties with the United States, despite its desire for a strategic alliance with the latter country. These include worries about the digital economy, labour and environmental norms, intellectual property, and agriculture. India must make sure that whatever new economic structure it enters does not conflict with its current economic goals.
  • Trade agreements are evolving: Older agreements were mostly concerned with tariffs, but more recent ones cover a wider range of topics. These in

    clude labour and environmental norms, intellectual property, services, investment, domestic regulation, and digital trade. The United States planned IPEF does away with the tariff component and places more emphasis on these non-tariff features.

  • Vague wording and potential pitfalls: Developing nations like India may find it challenging to properly comprehend the consequences of the IPEF due to its ambiguous language. The proposal’s haste raises questions about potential pitfalls and the agreement’s long-term effects. The worry is that participating nations would find themselves constrained by long-term agreements that affect the entire economy and reduce their domestic policymaking options.
  • Impacts on particular sectors: The IPEF may have significant effects on certain sectors. For instance, it might affect agricultural policy by influencing decisions about genetically modified food and seeds. Unfair labour and environmental norms may also threaten India’s ability to govern major technology businesses and its comparative advantage in manufacturing. Additionally, it can obstruct India’s efforts to create a dynamic home ecosystem in developing industries like the digital economy and green goods.

Way Forward

  • India must carefully weigh the consequences of entering the IPEF, thus this must be done.
  •  It should assess whether a strategic alliance with the United States should jeopardise its ability to pursue its economic interests and make independent policy decisions. 
  • To secure a positive outcome for India, it is essential to balance strategic aspirations with economic considerations.

Similar Topics

Countering China Through IPEF

Indo-Pacific Economic Framework for Prosperity (IPEF)